Present Recession- A Mindset Problem
Posted : March 6, 2009 at 3:55 pm [IST]
Recession psychosis is going deeper and deeper. Share market has collapsed. Perhaps the money is getting transferred to bullion market or in the purchases of dollars leading to unprecedented rise in prices of both the commodities. Gold costs Rs 16000 plus per 10 grams, and an US dollar is going above Rs 52. Prices of consumer goods, at least officially are going down. Industrial production all over the world has gone down. Economy of manufacturing nations- Japan, Germany, and certainly China are in shambles. Even the already lowered targets of GDP growth or exports have become unattainable. Stimuli may give some flicker of hope through rise in sales such as that of passenger cars and commercial vehicles in February. But perhaps on long term, it will be only the sustained improvement in the American economy that can bring the economy of other country including China and India on track. China might be in a situation worse than India because of its dependence on export based economy.
Many including Nobel laurel Amartya Sen consider the present recession in the global economy as more a matter of psychology than economics and according to him, no amount of financial stimulus would be enough to turn it around.
I had come to Kolkata this time for disposing of my property here. But the prices offered are nowhere near my expectations. Perhaps the buyers are hoping the prices to go further down and wish to wait. This may be the psychology of the buyers in all sectors. The middlemen are making the affairs messier with all sorts of predictions with some mischievous intentions.
With general election so near, the possibility of a new government is adding fuel to the uncertainlties. It may continue for at least next five-six months or more. One can hardly believe on the optimistic predictions of any.
However, I don’t believe the economic situation is so bad. As I know and hear, the crops all over the country are good and the agricultural production will be normal. I fail to understand why India’s agricultural output “contracted” or shrunk by 2.2 per cent in the third quarter of 2008-09, posting a negative growth for the first time in the past two fiscal years. One should not hope for very high growth in agriculture unless there are some breakthrough innovations for higher yields. Minimum support prices are better for farmers, so they can spend. Rural economy is also improving because of some good schemes such as NREGS. Pay rises because of pay commission also means more money available with consumers. Voters and the economy will get another boost from the money spent by the candidates in election. Crorepati candidates will spend all out to win and helping the economy.
There are many companies that are hardly affected by the global down turn. I visited one such company in sector V of Salt Lake that manufactures accessories and parts for the musical instruments and exports to all developed countries such as Japan, Germany and US. As the MD claims, “its still has yet not affected his business”. Niche businesses will be doing fine.
Every recession poses certain challenges and provides certain unique opportunities. Brave entrepreneurs cash on it. Many companies of India too are even today doing fine. Some may cut down the amount of annual increments, others may even freeze it, but layoffs will not be there solutions. For the unscrupulous ones, the bogey of layoffs is also to attract the government’s attention to get some more concessions.
Let India prove to the world that it can overcome the ill-effects caused by others and grow at a respectable speed. Everyone will have to work harder and smarter in real sense of the term.
Every product India makes and every process it uses must be the best globally.
- Indra
Category: Industry/Management |
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